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The North Dakota Industrial Commission. Left to right: Lynn Helms, Doug Goehring, Gov. Jack Dalrymple, Wayne Stenehjem

Alturas Energy violates NDIC rules and faces $900,000 fine

The North Dakota Industrial Commission has ordered Idaho-based Alturas Energy to pay $900,000 for violating a variety of state rules governing the oil and gas industry.

The company was notified in April by the commission that it had unlawfully abandoned wells and equipment, didn’t report spills nor clean them up, and violated other reporting requirements. The violations began in July 2013 when fluid was found pooled at one of its eight well sites near the Montana border in McKenzie County. Additional spills at other wells were noticed in November 2014 and January 2015, which were soaking into the soil and saturating the diking with no active spill cleanup. A few locations were also cited for inadequate diking.

North Dakota Department of Mineral Resources Director Lynn Helms told the commission on July 28 that the company operates out of Sidney, Montana and entered the Bakken in 2010, but they “have struggled ever since to keep wells in compliance.”

Related: North Dakota oil well completions slow sharply: Kemp

When a complaint was served to Alturas by the state’s assistant attorney general in April, the company asked for an extension, promising to work with the state, Helms explained. However, he said it appeared to be a stall tactic on the part of Alturas as no follow-up was ever made and attempts to contact the company have been unsuccessful. Of the company’s eight wells in the state, two are abandoned and six are inactive. It also has an abandoned treating plant. Helms said the NDIC order will push the case into the court system, hopefully allowing the state to move ahead with confiscating equipment, reclaiming the abandoned wells and taking action on the inactive wells.

“It’s important, especially as we see the lower oil price paradigm that we’re in, that we send a signal to companies that when they come into the state we expect them to comply with our rules,” Helms said. “We will work with them but we are not going to have an infinite amount of patience when they don’t respond.”

The company has a $115,000 bond that will help pay a fraction of the fine, but the commission discussed other opportunities to collect in the event that the company is in financial distress and unable to pay, including getting the court to allow the state to collect from the wells’ production revenue. Helms said the swiftest remedy would be for another operator to take over the wells and handle clean up. Otherwise, the state will tap into the Abandoned Oil and Gas Well Plugging and Site Reclamation Fund that was established by the Legislature in 1983. Deposits to this fund come from permit or service fees, forfeiture of bonds, federal funding, donations, oil and gas impact funds, sale of confiscated equipment and oil, and civil penalties.

Helms believes about six of Alturas’ wells are capable of producing since they are located in the Mondak field where wells were discovered in the 1980s and have historically flowed at least low rates of oil.

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